Indian River tax increases take seniors by surprise

Voters at Selbyville Middle School cast their ballot for the Indian River referendum. Due to a reduction in senior tax subsidies, older taxpayers will pay more in school taxes than originally expected when the vote took place.(Photo: Megan Raymond/Delmarva Media Group)

A change to a program that gives Delaware seniors a break on their property taxes caught some Indian River residents by surprise this month when they opened their tax bills to see their bills went up more than twice as much as expected.

Taxes in the Indian River School District were already set to increase thanks to a $7.35 million referendum passed in March, according to administrators.

Voters signed off on raising the tax rate 49 cents per $100 of assessed property value, bringing the rate up to $3.068 per $100 of assessed property value. That translates into a property tax increase of about $95 a year for the average taxpayer.

Usually, a subsidy called the Senior School Property Tax Credit would offset the cost of school taxes for homeowners 65 or older by a maximum of $500. But facing a nearly $400 million budget shortfall, the General Assembly recently reduced the tax credit to $400, saving the state a projected $5 million annually.

That automatically "raises" taxes for retirees, some on fixed incomes, by $100, as was reflected on tax bills sent out late this summer.

The change applies to seniors all over the state and not just in Sussex County, where Indian River is, but for districts that recently passed referendums, the changes may seem more dramatic.

Voters at Selbyville Middle School cast their ballot for the Indian River referendum. Due to a reduction in senior tax subsidies, older taxpayers will pay more in school taxes than originally expected when the vote took place.(Photo: Megan Raymond/Delmarva Media Group)

For instance, in the Colonial School District, taxes will go up about $276 a year (or $23 a month) for the average homeowner once a newly approved referendum is fully implemented. Some seniors will pay closer to $376 in additional taxes if you consider the tax credit change.

That's still $400 less than they would pay without the subsidy. The total amount of the tax credit is dependent on several factors, including co-ownership, and may not always add up to the $400 maximum.

Odilia Duszak, 77, who is on the board of the New Castle Senior Center and lives in the Colonial district, said Thursday she was unaware the subsidy had changed and that she would owe the extra $100 in taxes this year.

She said it spelled out just one more bad thing for seniors, who will also see reduced programming at the local senior center thanks to a 20 percent reduction in state Grants in Aid and a resulting $32,000 cut to the center's budget.

In Indian River, the district said it has received multiple phone calls from seniors regarding the increase in their school property tax bills and issued a statement on Thursday making it clear it was not a result of any action taken locally.

However, it is important to note that districts up and down the state, including Indian River and Colonial, disseminate information about the senior property tax credit while trying to pass referendums. Because they often have fixed incomes, seniors are often reluctant to vote for tax increases without the promise of some sort of subsidy.

Both the Indian River and Colonial referendums were passed before the tax credit was officially reduced.

"The remaining tax increase is the result of actions taken by the Delaware General Assembly in July," the district said. "The Indian River School District had no input or influence on the legislature’s decision to reduce the Senior Property Tax Discount. In setting its tax rate for FY18, the district has maintained the promises made to the public during the referendum process."

Contact Jessica Bies at (302) 324-2881 or jbies@delawareonline.com. Follow her on Twitter @jessicajbies.